OpenAI is not afraid of a compute spending spree.
Last week, the Wall Street Journal reported that the company expects to spend $750 billion on AI infrastructure by 2030, a 25% increase from its estimates earlier this year. Also announced last week, OpenAI is planning a 3.2 gigawatt data center in Georgia with a price tag anywhere from $20 to $30 billion.
While these numbers may give sticker shock, let's not forget that this isn't the first time OpenAI has made massive commitments to building out data centers, such as its partnership with the $500 billion Stargate project. With Stargate seemingly on ice and compute demand only ramping up further, OpenAI is finding new ways to fill the gap. But OpenAI is not the only one vying for raw compute power. Rival Anthropic has sought out a handful of pricey deals, largely to lease compute from other tech giants, including SpaceX, Amazon, Microsoft, Google, and most recently, Meta and AMD.
Anthropic does, however, have some plans to build out its own data centers, including a $50 billion investment with Fluidstack to build facilities in Texas and New York. Still, comparatively, Anthropic has committed far less in constructing and owning AI infrastructure than OpenAI.
However, as both companies continue their heated race to develop and release highly-capable (and power hungry) models, coupled with the meteoric rise of token-burning agents, compute is at a premium. As Robert Bittencourt, head of thematic investing at Apollo Global, said in a recent blog post: "In a compute-constrained world, access itself becomes a competitive moat … What looked like an overreach only months ago increasingly looks like strategic foresight."
And with its recent string of deals, Anthropic may be playing catch-up. This is evidenced by the fact that Claude users often report outages and hitting their rate limits faster than they do with OpenAI. One of the results of being compute-constrained is that Anthropic has had to taper access to its new flagship model, Fable 5. It's only available to Max and Team Premium users, and for only 50% of standard weekly usage limits, which means users have to consciously limit how they use the model.
Still, even despite contrasting spending habits, a lot has to go right for either of these companies to be winning bets for investors, including finding substantial revenue growth that outpaces spending, Jeremy Roberts, senior director of research and content at Info-Tech Research Group, told The Deep View.
"Ultimately, we will have to wait to review the companies’ financials as they proceed to their IPOs," said Roberts. "My speculative read is that both companies are struggling with profitability and taking on deeper and deeper commitments in an effort to win the compute race."
Our Deeper View #
Initially, the massive, trillion-dollar price tag that OpenAI committed to compute at one point raised all kinds of doubts and red flags about its future. However, now the company's valuation is scraping a trillion ahead of its IPO, and the industry is eating up every bit of compute that it can get its hands on. And with its primary rival making deal after deal to lease compute power, OpenAI's spending spree may have been the right call, while Anthropic may be kicking itself for taking the conservative approach to the AI infrastructure buildout. Additionally, owning the entire stack is an advantage in and of itself. OpenAI is embedding itself within every layer of a technology that it claims is on course to transform society. In this case, owning the literal power means owning figurative power, too.